On 22 June 2017, the Financial Conduct Authority (FCA) published its Regulation Round-up for June 2017, which includes an update on the FCA’s follow up work regarding general insurance appointed representatives (ARs).
In July 2016, the FCA published the findings of its Thematic Review of principals and their ARs in the general insurance sector, which highlighted significant shortcomings and examples of mis-selling and customer detriment. Consequently, the FCA conducted a piece of follow-up work, focusing on London Market insurance intermediaries that had diversified and developed networks of ARs which the FCA had identified as a specific risk.
The outcome of this work was that the issues in the FCA’s Thematic Review existed in a wider sample of firms in this sector. The FCA found:
- Widespread failings in principals’ oversight of their ARs. These included not giving adequate consideration to the impact of appointing ARs on their businesses and not undertaking adequate due diligence prior to appointing ARs.
- Significant shortcomings with ARs involved in the sale of warranty insurance products. The FCA found numerous examples of potential mis-selling because customers had been given inadequate information.
The FCA has visited 20 principal firms across both pieces of work and has undertaken interventions in more than a third of these. In addition, the FCA has agreed that voluntary requirements are placed on the regulatory permissions of seven of these firms and commissioned two section 166 skilled persons reports. There is also some ongoing work with some of these firms on remediation and redress.